Measuring brand loyalty in the hospitality
industry in South Africa
L Scholtz
20969120
Mini-dissertation submitted in partial fulfillment of the
requirements for the degree Magister
in Business
Administration at the Potchefstroom Campus of the North-West
University
Supervisor:
Prof CA Bisschoff
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ABSTRACT
Brand loyalty development is an important part of a company‘s marketing strategy. Empirical data on the influences of brand loyalty in the South African hospitality industry is non-existent.
Moolla and Bisschoff developed an empirical tool for measuring twelve influences of brand loyalty in, originally, the fast moving consumer goods (FMCG) industry. The model has since been validated and the reliability of the data confirmed for various industries such as agri- business, banking and pharmaceutical industries. The twelve influences the model test are; customer satisfaction, culture, brand performance, brand relevance, relationship proneness, brand affect, repeat purchase, perceived value, commitment, involvement, switching cost and brand trust. An adapted Moolla and Bisschoff model is employed in the hospitality industry, and more specifically the hotel sector, which aims to determine the role each influence plays on brand loyalty. Questionnaires were distributed to guests at various branded hotels in South Africa of which 187 patrons responded positively. The Kaiser-Meyer-Olkin measure indicated sample adequacy and suitability for factor analysis, where after the questionnaire was validated and the data found to be reliable.
According to the respondents‘ perceptions, customer satisfaction is regarded as the single most very important brand loyalty influence in the hospitality industry. Brand trust, repeat purchase, involvement, perceived value, relationship proneness, brand affect, brand relevance and brand performance can also be seen as important factors. Switching cost, commitment and culture were not considered to be very important brand influences. Sub-factors were identified for the influences of perceived value and relationship proneness. A new conceptual framework for brand loyalty in the hospitality industry was therefore suggested. The results of this study concluded that the adapted Moolla and Bisschoff model is indeed a valuable tool for measuring brand loyalty influences in the hospitality industry. This study also contributed to the knowledge base regarding brand loyalty of the South African hospitality industry in South Africa.
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ACKNOWLEDGEMENTS
I would like to thank the following persons without whom this mini-dissertation would not have been possible.
My amazing, loving husband Corné. Thank you for all the patience, support and love. It is an honour to be by your side.
My gorgeous children, Christoff and Adriaan. Thank you for understanding and continuous unconditional love. Mommy will be home more in future.
For my Dad (RIP), Tannie Dulcie and my Mother-in-Law, Erika, thank you for all the support and babysitting.
Friends, family and colleagues for your understanding and continuous support. Thank you for the numerous questionnaires you completed over the three years.
To the Mike-Bravo-Alpha syndicate group (André, Bertus, Danelle, Edwina & Yolandi) for the teamwork support and encouragement during our studies. It has been an honour to get to know you and your families, not only become study partners, but also friends.
My advisor and supervisor, Prof Christo Bisschoff for your guidance and support.
My employer, the NWU for the opportunity and financial support.
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TABLE OF CONTENTS
Abstract ... i
Acknowledgements ... ii
Table of content ... iii
List of tables ... viii
List of figures ... x
CHAPTER 1: NATURE AND SCOPE OF THE STUDY ... 1
1.1 Introduction ... 1 1.2 Problem statement ... 2 1.3 Objectives ... 3 1.3.1 Primary objective ... 3 1.3.2 Secondary objectives ... 3 1.4 Research design ... 4 1.4.1 Literature study ... 3 1.4.2 Empirical study ... 4 1.4.2.1 Population ... 4 1.4.2.2 Questionnaire... 4 1.4.2.3 Data collection ... 5
1.4.3 Statistical techniques employed ... 5
1.4.3.1 Kaiser-Meyer-Olkin measure of sampling adequacy………… ………..6
1.4.3.2 Bartlett's test of spherity ... 6
1.4.3.3 Exploratory factor analysis ... 7
1.4.3.4 Cronbach‘s alpha reliability coefficient ... 7
1.5 Layout of the study ... 8
1.5.1 Chapter 1: Nature and scope of the study ... 8
1.5.2 Chapter 2: Literature review ... 8
1.5.3 Chapter 3: Research findings and discussion ... 9
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CHAPTER 2 : LITERATURE STUDY ... 10
2.1 Introduction ... 10 2.2 Branding ... 10 2.3 Brands ... 10 2.3.1 Defining a brand ... 10 2.3.2 Benefits of brands ... 11 2.4 Brand loyalty ... 12
2.4.1 Defining brand loyalty ... 12
2.4.2 Types of brand loyalty customers ... 12
2.4.3 Developing brand loyalty ... 14
2.4.4 Measuring brand loyalty ... 15
2.5 Brand loyalty in the hospitality industry ... 15
2.6 The Moolla and Bisschoff model ... 20
2.6.1 Brand loyalty influences of the Moolla and Bisschoff model. ... 20
2.6.1.1 Customer satisfaction ... 19 2.6.1.2 Switching cost ... 19 2.6.1.3 Brand trust ... 20 2.6.1.4 Relationship proneness ... 20 2.6.1.5 Involvement ... 21 2.6.1.6 Perceived value ... 21 2.6.1.7 Commitment ... 21 2.6.1.8 Repeat purchase ... 22 2.6.1.9 Brand affect ... 22 2.6.1.10 Brand relevance... 23 2.6.1.11 Brand performance ... 23 2.6.1.12 Culture ... 23
2.6.2 Ranking the influences of brand loyalty ... 25
2.6.3 Validation of the Moolla and Bisschoff model ... 26
2.6.4 Empirical evaluation of the Moolla and Bisschoff model in the FMCG industry ... 27
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2.6.5 Extension of the model beyond the FMCG industry ... 28
2.6.5.1 Service industry ... 28
2.6.5.2 Business-to-business environment ... 29
2.7 Conclusion ... 30
CHAPTER 3: RESEARCH FINDINGS AND DISCUSSION ... 31
3.1 Introduction ... 31 3.2 Research methodology ... 31 3.2.1 Questionnaire development ... 31 3.2.2 Data collection ... 33 3.3 Empirical results ... 33 3.3.1 Demographic profiles ... 34 3.3.2 Quantitative analysis ... 39
3.3.2.1 Validity of the questionnaire ... 38
3.3.2.1.1 Customer satisfaction ... 38 3.3.2.1.2 Switching cost ... 39 3.3.2.1.3 Brand trust ... 40 3.3.2.1.4 Repeat purchase ... 41 3.3.2.1.5 Involvement ... 42 3.3.2.1.6 Perceived value ... 43 3.3.2.1.7 Commitment ... 44 3.3.2.1.8 Relationship proneness ... 45 3.3.2.1.9 Brand affect ... 46 3.3.2.1.10 Brand relevance... 47 3.3.2.1.11 Brand performance ... 48 3.3.2.1.12 Culture ... 49 3.3.2.2 Reliability of results ... 50
3.3.3 The importance of research variables ... 53
3.3.3.1 Customer satisfaction ... 52
3.3.3.2 Switching cost ... 53
3.3.3.3 Brand trust ... 54
vi 3.3.3.5 Involvement ... 55 3.3.3.6 Perceived value ... 56 3.3.3.7 Commitment ... 57 3.3.3.8 Relationship proneness ... 58 3.3.3.9 Brand affect ... 58 3.3.3.10 Brand relevance... 59 3.3.3.11 Brand performance ... 60 3.3.3.12 Culture ... 60
3.3.3.13. Summary of mean values ... 62
3.4. Summary ... 64
CHAPTER 4: CONCLUSIONS AND RECOMMENDATIONS ... 64
4.1. Introduction ... 65
4.2. Conclusions and recommendations ... 65
4.2.1. Validity and reliability ... 65
4.2.1.1 Conclusion 1 ... 64
4.2.1.2 Conclusion 2 ... 65
4.2.1.3 Conclusion 3 ... 65
4.2.1.4 Recommendation 1 ... 65
4.2.2. Brand loyalty influences ... 67
4.2.2.1 Conclusion 4 ... 66 4.2.2.2 Conclusion 5 ... 66 4.2.2.3 Conclusion 6 ... 66 4.2.2.4 Recommendation 2 ... 67 4.2.2.5 Recommendation 3 ... 67 4.2.2.6 Recommendation 4 ... 67
4.3. Brand loyalty model for the hospitality industry ... 68
4.4. Suggestions for future research ... 70
4.5. Summary ... 70
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viii
LIST OF TABLES
Table 2.1: Loyalty influences challenged in the hospitality industry ... 18
Table 3.1: Comparison between respondend age distribution and the South African population ... 35
Table 3.2: Comparison between respondendt ethnicity distribution and the South African population ... 37
Table 3.3: KMO and Bartlett‘s test for customer satisfaction ... 39
Table 3.4: Factor analysis for customer satisfaction ... 40
Table 3.5: KMO and Bartlett‘s test for switching cost ... 40
Table 3.6: Factor analysis for switching cost ... 41
Table 3.7: KMO and Bartlett‘s test for brand trust ... 41
Table 3.8: Factor analysis for brand trust ... 42
Table 3.9: KMO and Bartlett‘s test for repeat purchase ... 42
Table 3.10: Factor analysis for repeat purchase ... 43
Table 3.11: KMO and Bartlett‘s test for involvement... 43
Table 3.12: Factor analysis for involvement ... 44
Table 3.13: KMO and Bartlett‘s test for perceived value ... 44
Table 3.14: Factor analysis for perceived value ... 45
Table 3.15: KMO and Bartlett‘s test for commitment ... 45
Table 3.16: Factor analysis for commitment ... 46
Table 3.17: KMO and Bartlett‘s test for relationship proneness ... 46
Table 3.18: Factor analysis for relationship proneness ... 47
Table 3.19: KMO and Bartlett‘s test for brand affect ... 47
Table 3.20: Factor analysis for brand affect ... 48
Table 3.21: KMO and Bartlett‘s test for brand relevance ... 48
Table 3.22: Factor analysis for brand relevance ... 49
Table 3.23: KMO and Bartlett‘s test for brand performance ... 49
Table 3.24: Factor analysis for brand performance ... 50
Table 3.25: KMO and Bartlett‘s test for culture ... 50
Table 3.26: Factor analysis for culture ... 51
Table 3.27: Cronbach‘s alpha coefficient interpretation ... 51
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Table 3.29: Points allocated to statements ... 53
Table 3.30: Mean scores of customer satisfaction ... 54
Table 3.31: Mean scores of switching cost ... 55
Table 3.32: Mean scores of brand trust ... 55
Table 3.33: Mean scores of repeat purchase ... 56
Table 3.34: Mean scores of involvement ... 57
Table 3.35: Mean scores of perceived value ... 57
Table 3.36: Mean scores of commitment ... 58
Table 3.37: Mean scores of relationship proneness ... 59
Table 3.38: Mean scores of brand affect ... 60
Table 3.39: Mean scores of brand relevance ... 60
Table 3.40: Mean scores of brand performance ... 61
Table 3.41: Mean scores of culture ... 62
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LIST OF FIGURES
Figure 1.1: Data analysis flow chart ... 6
Figure 2.1: Customer loyalty pyramid ... 13
Figure 3.1: Age of respondents ... 34
Figure 3.2: Gender... 35
Figure 3.3: Income per annum of respondents ... 36
Figure 3.4: Ethnicity of respondents ... 36
Figure 3.5: Frequency of hotel stays ... 37
Figure 3.6: Reason why respondents overnight in a hotel ... 38
Figure 3.7: Bookings ... 38
Figure 3.8: Mean values of brand loyalty influences ... 63
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CHAPTER 1
NATURE AND SCOPE OF THE STUDY
1.1 Introduction
A brand can be defined as ―A set of mental associations, held by the consumer, which add to the perceived value of a product or service‖ (Keller, 2008:5). A brand is therefore the perception which distinguishes a certain good or service from competitors. A well established brand can be seen as one of the most valuable assets of a company (Kotler & Armstrong, 2012:267). Branding is firstly used to attract new customers and secondly to retain loyalty or patrons thus providing a competitive edge to a good or service.
The rivalry amongst competitors is fierce and branding can distinguish one company from the next and create an assumption of a certain level of good or service provided (Brodie et al., 2009:345). Firms can obtain a sustainable competitive advantage by implementing value-creating branding strategies. Such strategies must be unique, valuable, and not easily copied and/or implemented by competitors in order to truly build a sustainable competitive advantage for a company. Sustainable, competitive advantages should be, by definition, maintained over a long period of time and the competition must not be able to reproduce the strategy for a considerable amount of time. Developing a sustainable, competitive advantage includes, amongst other factors, customer loyalty and a reputation for good customer service.
Many companies spend a great amount of resources to assure that a consistently high quality service is delivered across all branches and/or franchises. Brands act as the key element of a company‘s relationship with the customer and also as a measurement of customer satisfaction. Creating loyalty to a certain brand amongst customers will ensure continuous support as retained customers tend to produce greater cash flow. Not only is creating loyalty to a brand important for sales, but according to Reichheld (1996), the cost to attract new customers by far exceeds the cost to create loyal customers.
Branding in the hospitality industry is no different from other industries. The hospitality industry is very competitive and to build a strong customer base is crucial for
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sustainable business, regardless of the hotel or the size of the hotel group. The point of branding in the hospitality industry is to enhance a customer‘s perception of consistent value and therefore reducing risk. Kyriakidis and Rach (2010:5) indicated that hotel guests build the foundation of their loyalty towards a brand based on a memorable experience. A shift in the hotel industry to move away from real estate business models to service and customer centred models has resulted in branding of hotels becoming common practice since the turn of the century (Freed, 2013). Kyriakidis and Rach (2010:7) rightfully stated that as in all industries, measurement is the way to characterize success. Information gathered about customer loyalty towards a company specific brand can produce valuable managerial information. This brand loyalty information can be used to strategically plan and implement a successful marketing strategy within a company. Surprisingly, Kyriakidis and Rach (2010:7) also reported that only a third of companies measure the performance of their brand.
1.2 Problem Statement
This study aims to investigate the loyalty customers have towards hotel brands in South Africa. Although literature research revealed few studies older than ten years focusing on customer brand loyalty in the hotel industry, a few exceptions are the studies by Hallowell (1996), Tepeci (1999) as well as Pritchard and Howard (1997). Also, not many studies investigating brand loyalty in the hotel industry have been performed in the past ten years. Studies performed by Suhartanto (2011), Kayaman and Arasli (2007), Back (2005), Wilkins et al. (2010), Nam et al. (2011), Lee and Back (2009), Han and Back (2008) and Kim et al. (2008) will be discussed as representative examples. These studies investigate various influences that might play a role on brand loyalty of guests, but mostly focus on only three to four influences at a time. None of these studies, older or more recent, purely measure brand loyalty within the South African hotel industry against more than five factors at a time.
Moolla and Bisschoff (2012a) identified twelve major influences of brand loyalty with regards to fast moving consumer goods (FMCG). Using literature studies a model was developed to measure brand loyalty using these influences. The twelve influences identified are: customer satisfaction, culture, brand performance, brand relevance, relationship proneness, brand affect, repeat purchase, perceived value, commitment, involvement, switching cost and brand trust. The model was evaluated using
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questionnaires and turned out to be a promising model which could be applied widely over the FMCG industry (Moolla & Bisschoff, 2012c:71; du Plooy, 2012:iii). The model has been empirically validated and the data confirmed to be reliable, thus providing management with a trustworthy tool to measure brand loyalty of especially FMCGs within a specific company. Moolla and Bisschoff (2013:6) furthermore ranked the loyalty influences in order of importance giving management a tool to strategically direct their marketing efforts when branding a good.
The model has previously been extended and applied to the service industry and more specifically the banking and voluntary professional institute sectors. Müller (2012:6) used an adapted Moolla and Bisschoff model questionnaire to describe the connection between brand loyalty and relationship marketing in a voluntary professional institute. Salim (2011:ii) investigated brand loyalty in the banking industry also using an adapted questionnaire based on the Moolla and Bisschoff model.
Through the studies of Müller (2012) and Salim (2011) it is demonstrated that the Moolla and Bisschoff model can successfully be used to determine brand loyalty in the service industry. The question now is if this same adapted model can be implemented to measure brand loyalty the hospitality industry.
1.3 Objectives
1.3.1 Primary objective
The primary objective of this study is to measure brand loyalty in the South African hospitality industry.
1.3.2 Secondary objectives
The secondary objectives are to:
a) Adapt the questionnaire employed by Moolla and Bisschoff (2012a) to measure brand loyalty in the hospitality industry.
b) Statistically validate the questionnaire for use in the hospitality industry. c) Ensure sample adequacy.
d) Determine the reliability of the data.
e) Measure brand loyalty in the hospitality industry.
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1.4 Research Design
1.4.1 Literature study
This study is supported by literature investigation demonstrating the research problem as well as the various aspects of brand loyalty. The literature study is a review of previous research in the hospitality industry, brand loyalty and the Moolla and Bisschoff model. Information used in the literature study is mainly sourced from books, research articles in journals as well as articles in magazines, internet sources and other popular media. The aim of the literature study is to provide an increased body of knowledge around a) brand loyalty in the hospitality and more specific hotel industry and b) the Moolla and Bisschoff model for measuring brand loyalty based on twelve loyalty influences.
1.4.2 Empirical study
The empirical study entails investigating brand loyalty within the service industry pertaining to hotel brands. The selected questionnaire collects data across twelve major loyalty influences by means of a 7-point Likert scale. An adequate sample size is confirmed statistically by employing the Kaiser, Meyer and Olkin test of sample adequacy. The reliability of the data, validity of the questionnaires as well as the correlations between the variables are determined. The model is statistically measured and compared against the outcomes already presented in literature in both the FMCG industry (Moolla & Bisschoff, 2012a; 2012b; 2012c; 2013), the pharmaceutical industry (du Plooy, 2012) and the service industries (Salim, 2011; Müller, 2012).
1.4.2.1 Population
The prospective respondents are guests at some of the major branded hotels in South Africa. The only exclusion criteria is in the case of minors (<18 years), due to legal competence. Furthermore guests with diverse demographics are targeted. Hair et al. (1998:124) recommends a sample size ratio of fourteen observations to each variable in order to perform factor analysis. The number of respondents thus depends on the number of variables considered. Since the questionnaire investigates data pertaining to twelve variables (addressed using a total of 50 statements), at least 168 respondents are needed to have a statistically adequate sample. Studies previously investigating brand loyalty based on the Moolla and Bisschoff model, produced statistically
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satisfactory results with samples sizes of 196 (Salim, 2011:27), 185 (Müller, 120:49) and 250 (du Plooy, 2012:45) respectively. The aim for this study is therefore to obtain a minimum sample size of 200 respondents.
1.4.2.2 Questionnaire
As the subject of the research in this study is different from the subject of the research done by Moolla and Bisschoff (2012a; 2012b; 2012c; 2013), service industry as opposed to the FMCG, the questionnaire is adapted to be more relevant to testing brand loyalty in the hospitality industry. Demographical questions are also adapted to produce relevant and exploitable information for the hotel industry. See addendum 1 for a copy of the questionnaire.
1.4.2.3 Data collection
The questionnaires are distributed using a personal method where respondents are approached in person and the questionnaire completed immediately. Similar studies performed previously by Salim (2011:27) and Müller (2012:185) used sample sizes of ±200 which yield statistically reliable data and a valid questionnaire. Based on the studies of Salim (2011:27) and Müller (2012:185), a similar sample size of ±200 respondents were therefore the aim for this study. Questionnaires were completed in several brand hotels thoughout South Africa.
1.4.3 Statistical techniques employed
A software package is used for the determination of the Cronbach‘s alpha (α), Kaiser-Meyer-Olkin (KMO) analysis, Bartlett‘s test of sphericity and a factor analysis. The software package, ―Statistical Package for the Social Sciences‖ (SPSS version 12), a good of IBM and especially designed and widely used in social sciences, is used. These statistical results indicate the reliability of the data as well as the validity of the questionnaire. Figure 1.1 explains the sequence and flow of the data analysis.
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Figure 1.1: Data analysis flow chart
Adapted from Naidoo (2011:19)
The questionnaire tests multiple variables and employs the following population multivariate statistics:
Firstly, a test to determine the adequacy of the sample size using KMO analysis. Secondly, a test to determine the strength of the relationship among variables using the Bartlett‘s test of sphericity. After both the KMO and Bartlett‘s tests deliver satisfactory results, data analysis continues to exploratory factor analysis using factor loading. Lastly, the reliability of the questionnaire is determined by Cronbach‘s alpha.
1.4.3.1 Kaiser-Meyer-Olkin measure of sampling adequacy
The Kaiser-Meyer-Olkin (KMO) test, measure of sampling adequacy, determines partial correlations among different variables of a questionnaire. The KMO test calculates the ratio of the squared correlation between variables to the partial correlation of variables and for this study, is calculated between multiple variables. The KMO ratio is expressed between a value of 0 and 1 and a larger KMO value indicates a more reliable factor analysis for a particular sample size. Because factor analysis is used in this study to analyse the data, it must be preceded by the Kaiser-Meyer-Olkin (KMO) test to ensure that the data are suitable for statistical analyses of multiple variables. For this study, the
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same exclusion criteria applied by Naidoo (2011:20), namely a KMO value of > 0.7 must be true before factor analysis continues.
1.4.3.2 Bartlett’s test of sphericity
Bartlett‘s test of sphericity examines the significance of the study and is an indication of the validity and suitability of the responses collected. The Bartlett‘s test of sphericity is used as an indicator for both relationship strength among variables and suitability of the data. Variance-covariance matrix proportional to the identity matrix is determined (Business Analytics, 2014). In practice, the Bartlett‘s test investigates the hypothesis that the variables are uncorrelated in the population. This means that each variable correlates perfectly with itself (r = 1) but has no correlation with the other variables (r = 0). The study is deemed significant when the variables across conditions are equal and also the covariances between pairs of conditions are equal. A significance level of closer to 0 will reject the hypothesis and indicate a strong relationship among the variables. Ideally the significance level must be as close to 0 as possible.
This study uses the same Bartlett‘s test of sphericity minimum value Naidoo (2011:21) employed at 0.005. This means that values of <0.005 are regarded to be significant and that the strength of the relationship among variables is strong and that the data are suitable to be subjected to factor analysis.
1.4.3.3 Exploratory factor analysis
In multivariate statistics, exploratory factor analysis (EFA) investigates underlying structures of large numbers of variables and the internal reliability of a questionnaire (Grafarend, 2014). EFA is based on the common factor model where a function of common factors, unique factors, and errors of measurements express measured variables. Note that EFA assumes that any measured variable may be associated with any factor. The EFA uses the number of factors, extraction method and method of rotation as decision points.
The Normalised Varimax rotation extracts factors from the component matrix. This method of rotation attempts to maximise the dispersion of factor loadings within the factors (Field, 2007:749). Factor loading, which is a regression coefficient of a variable in the linear model, determines the relative importance or weight of a criterion in relation
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to a specific factor where it loads. A factor loading, in line with the study performed by Naidoo (2011:21), at a minimum of 0.40 was set for this study.
1.4.3.4 Cronbach’s alpha reliability coefficient
Any measuring instrument, such as a questionnaire, has the potential to produce many different outcomes, equal to the exponential number of statements, every time it is used under the same conditions and therefore potentially has low reliability (Field, 2007:668-669). Cronbach's alpha (α) is a coefficient of internal consistency of the statements of a measurement instrument and commonly used as an estimate of the reliability of a questionnaire. Internal consistency describes the extent to which all the statements in a questionnaire measure the same concept or influence. It can be described as the reliability measured as the correlation of the test with itself. Squaring the correlation and subtracting from 1.00 produces an index of measurement error between 0 and 1 (Tavakol & Dennick, 2011:53)
For this study, Cronbach‘s alpha coefficient is employed to assess the reliability and internal stability of the data produced by the questionnaire. A minimum coefficient value of α >0.70 was allowed to indicate the data as reliable.
1.5 Layout of the study
The mini-dissertation will be divided into the following chapters:
1.5.1 Chapter 1: Nature and scope of the study
Chapter one identifies the primary and secondary objectives of this study and also addresses the need to measure brand loyalty in the hospitality industry of South Africa. Chapter one also elaborates on the structure of this study and describes the statistical methodology.
1.5.2 Chapter 2: Literature review
Chapter two reflects on the concept of branding and brand loyalty as well as the benefits of branding and brand loyalty. Chapter two includes a literature review of the South African hospitality and more specifically the hotel industry. The Moolla and Bisschoff model for brand loyalty will be discussed and the twelve influences of brand loyalty identified by Moolla and Bisschoff are presented in more detail.
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1.5.3 Chapter 3: Research findings and discussion
Chapter three presents the analysis of the data and the empirical results of this study. The empirical results focus on the demographic profile of the respondents, the validity of the questionnaire, the reliability of the results as well the importance of the research variables.
1.5.4 Chapter 4: Conclusions and recommendations
Chapter four, which is the final chapter of this study, provides conclusions with regard to the results and suggests an adapted model for measuring brand loyalty in the hospitality industry as well as recommendations for future research.
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CHAPTER 2
LITERATURE STUDY
2.1 Introduction
This chapter presents a literature review on the concept of branding and brand loyalty as well as the benefits of branding and brand loyalty. Chapter two also explores research studies on brand loyalty in the hospitality and more specifically the hotel industry. The Moolla and Bisschoff model will be presented as a possible model to measure brand loyalty in the hospitality industry. The twelve influences of brand loyalty identified by Moolla and Bisschoff will also be discussed in more detail.
2.2 Branding
Branding started as an age old tradition to burn, cut or stamp a manufacturer or owner‘s distinctive marks unto a good to validate the origin and quality. Silver and gold wares were branded by a jeweller‘s unique logo and cattle by the owners‘ initials. Merchants and shop owners as early as ancient Babylon, Egypt and China would decorate their stalls or shops with a particular brand to advertise the quality of goods they sell (Landa, 2005:xx).
Modern day branding was born in England in the 1600s and by the 1700s, trademarks and stamps became everyday practice. During the industrial revolution with the onset of mass production, companies started to use branding to distinguish their goods from others and stimulate interest (Landa, 2005;xxii). Manufacturers quickly learned to build a brand identity to attract a certain type of customer. The practice of branding evolved to the effective marketing strategy known today, encouraging consumers to purchase the brand instead of the good.
2.3 Brands
2.3.1 Defining a brand
A brand is defined by the American Marketing Association Dictionary (2014) as a "Name, term, design, symbol, or any other feature that identifies one seller's good or service as distinct from those of other sellers." A brand can therefore be described as a
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way a company differentiate their goods or services from the competitor. A well established brand is recognised by the public through a word, phrase, slogan, logo or even a sound or musical jingle. Rivalry amongst competitors is fierce and such a recognisable word, logo or sound acts as a reminder of the unique good or service offered and can be seen as one of the most valuable assets belonging to a company. Brands act as a key element in the relationship a company builds with the customer. A brand is established and maintained by an effective marketing campaign and seeks to create and fulfil the expectations of a target market segment. Branding marketing strategies firstly aim to attract new customers and secondly to retain customers by creating loyalty towards the brand.
2.3.2 Benefits of brands
Branding is not only a very powerful marketing technique, but a part of your product strategy and can also be seen as an asset to a company which must be developed wisely and managed carefully (Kotler & Armstrong, 2012:267). A powerful brand creates equity for a company. Kotler and Armstrong (2012:267) define brand equity as ―the differential effect that knowing the brand name has on customer response to the product and its marketing‖. Positive brand equity is displayed when a customer favours a particular good above others, regardless of secondary influences such as price, value or even the good itself. A positive brand can be such an important equity that accountants recognise the intangible asset often as the most valuable asset on a company balance sheet.
Creating loyalty to a certain brand amongst customers will ensure continuous support. Loyal customers buy more frequently and in larger volumes (Huges, 2006:3) while faithful buyers tend to pay more money for the same goods (Moa, 2010:213) and together result in greater cash flow.
It is argued that creating loyal customers is more important to net profit than attracting mere sales, simply due to the fact that the cost to attract a new customer by far exceeds that of the cost to create and retain loyal customers (Poulton, 2012; Huges, 2006:3; Garrett, 2006:35). Over and above the effort to establish a brand, many companies focus a great amount of resources to assure the maintenance of the brand through consistent high quality service delivery across all branches and/or franchises.
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Companies thereby cash in to the intangible value of word-of-mouth and free marketing a loyal customer brings to a company (Garrett, 2006:35).
Well managed branding can also result in higher sales, not only for the branded good, but also on other goods associated with that brand. Co-branding is often used to promote a wider appeal and attract a broader customer base and increased brand equity (Kotler & Armstrong, 2010:273). A well-managed brand can also create opportunities for brand extensions and licensing agreements
2.4 Brand loyalty
2.4.1 Defining brand loyalty
Moolla (2010:5) defined brand loyalty as ―the extent of faithfulness of consumers to a particular brand. Brand loyalty is most commonly expressed through repeat purchases, irrespective of marketing pressure generated by competing brands‖.
Mao (2010:213) defines brand loyalty as ―keeping preferable to a specific product or service while they believe that their choice is better than others‖.
Loyalty towards a brand can be seen as the situation in which a customer will prefer to buy the same good or service from one supplier over buying from another supplier. A loyal customer will become committed to a particular good and repeat purchases over extensive periods of time.
2.4.2 Types of brand loyalty customers
Various authors endeavoured to classify consumers according to their level of loyalty. Aaker (1991:40) views consumers in five levels of brand loyalty and groups customers accordingly into a loyalty pyramid as illustrated in figure 2.1.
The switcher consumers create the base of the pyramid and include price sensitive, indifferent consumers with no brand loyalty. Consumers in the habitual group show loyalty due to habit and have no reason to change. Customers from the satisfied group expect switching brands to come at a cost, which they would like to avoid. Brand likers are true brand enthusiasts and have an emotional attachment to the brand. At the top tier of the pyramid are the committed customers whom will only switch when forced by strong outside influences.
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Figure 2.1: Consumer loyalty pyramid
Aaker (1991:40)
Rowley (2005:576) propose four types of loyal customers namely; captive, convenience-seeker, contented and committed.
The captive customer is loyal because they do not have a choice. This is often due to uncontrollable external influences such as a good or service monopoly. Customers will often remain captive due to high switching costs. Most captive customers are neutral to the brand and will switch brands for only a few reasons. Reasons that might result in captive customers switching brands include; a large decision to be made, new and more attractive entrants to the market or changes in personal situation, such as change in finances (Rowley, 2005:577).
Convenience-seeker customers are identified by routine, low-involvement purchases.
Convenience is the main driver and they will revisit a shop because it is the closest or repurchase out of habit. Convenience-seekers also have neutral feelings towards a brand, because to them, convenience outweighs emotions. Customers that are convenience-seekers are however, vulnerable to marketing campaigns of other brands and will change brands very easily if another brand become more convenient (Rowley, 2005:578).
The contented customer is happy with the goods they buy, but does not display further engagement with the brand through buying other goodss of the same brand. This can
Switcher Habitual Satisfied
Likes Committed
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be explained by independent purchase decisions where the other goods are not relevant to their needs. Contented customers have a positive attitude towards the good they regularly buy, but will consider switching if they receive better value elsewere. A
contented customer will also switch if their goods fails, or a more advanced product
enters the market (Rowley, 2005:579).
A committed customer is one who has a positive attitude towards the good and will re-purchase regardless of circumstances. For companies the aim of branding strategies are to create committed customers as they will not easily consider other brands and patronage is almost guaranteed. The committed customer is a valuable asset to any brand as they often engage in active word-of-mouth marketing. The committed customer will only switch brands after an extremely negative experience or when a new good that clearly offers much more value and / or benefits enters the market (Rowley, 2005:579).
Kotler (1997:262) divides loyal customers into the following categories based on the buying frequency:
Hard-core loyals with undivided loyalty, buying only one brand all the time.
Split loyals have loyalty to two or three brands, switching between the purchases.
Shifting loyals move from one brand to another determined by changing perceptions.
Switchers with no loyalty to any particular brand possibly due to price sensitivity or constantly looking for new goods or services.
2.4.3 Developing brand loyalty
Garrett (2006:35) feels it is important to develop a brand customers can associate with, thereby resulting in brand loyalty. Customers create their sense of loyalty, positive or negative, through experiences associated with a good or service. An innovative brand loyalty marketing strategy should aim to create an emotional connection to the brand. Garrett (2006:35) therefore suggests a branding action of efficient customer service delivery which will result in the customer feeling valued and then develop the important positive emotion towards the brand. Garrett (2006:35) continues to emphasise the good as a very important aspect when it comes to emotional responses of customers. The good is the single tangible item the customer will spend the most time with, post purchase, and it is therefore of utmost importance to ensure the customer enjoys a
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positive experience with the good. Quality control procedures are therefore important tools in reducing the likelihood of a buyer experiencing good malfunction and disappointment.
2.4.4 Measuring brand loyalty
Brand loyalty was first measured during the 1940‘s. In a unidimentional level Guest (1944:16) studied how brand preference relates to attitudinal loyalty. Since then, researchers developed the measurement of brand loyalty into the multidimensional field, determined by various psychological processes recognised today. Brand loyalty can be a conscious or subconscious decision and is expressed through the intention to repurchase a brand continually. Loyalty towards a brand occurs through consumer perception that a brand offers the right good features, image, or level of quality and at the right price. Consumer behaviour can also be viewed as safe and familiar habits. Research conducted by Maritz (2009:1) indicated that there is no single measurement tool that fits across all industries, customers or goods and a measurement tool must be customised for every situation.
2.5 Brand loyalty in the hospitality industry
Branding in the hospitality industry is no different from other industries. The hospitality industry is very competitive and a strong customer base is crucial for sustainable business, regardless of the hotel or the size of the hotel group. The point of branding in the hospitality industry is to enhance a customer‘s perception of consistent value which will result in repeated patronage. O‘Neill and Mattila (2010:28) as well as Kyriakidis and Rach (2010:7) indicated that hotel guests build the foundation of their brand loyalty based on memorable experiences. O‘Neill and Mattila (2010:28) rightfully stated that a hotel brand represents a relationship with guests and is cultivated as customers become more familiar with the brand. A shift in the hotel industry to move away from real estate business models to service and customer centred models resulted in branding of hotels becoming an essential component of any hotel‘s marketing campaign (Freed, 2013; Dev et al., 2009:19).
A strong brand can significantly increase income, as guests are willing to pay on average more for a hotel brand they perceive to provide a service of high quality (Boundless marketing, 2014). Boundless marketing (2014) continues by stating that a
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truly loyal customer is willing to pay any price regardless of quality, thus resulting in a less elastic to inelastic demand curve. Overnight stays at a particular hotel brand will should tend more to an elastic demand curve where the number of visits or amount of money a patron is willing to pay will directly relate to price. It is therefore a very important strategy in the hotel industry to create loyal customer and shift the demand curve more towards less elasticity. Many hotels therefore choose to extend their brands as part of their branding strategy in an attempt to create more loyal customer and less elastic curves. According to O‘Neill and Mattila (2010:30), brand-extension is an effective strategy used by the hotel industry and is based on the preference guests exhibit to a hotel brand matching their type of travel (such as leisure or business). Collaboration amongst brands that focus on a specific type of traveller will automatically instil a collective feeling of trust as a result of a satisfactory experience with one of the brands. For this reason, the hospitality and travel industry excelled in marketing the package deal to customers. Typically such a package will include air travel, car rental, overnight stay and meals marketed collectively and often anchored by a strong brand. Many hotels offer a franchising business model. The choice of brand plays a very important role in the decision process of a new prospective owner as to which franchise to procure. Commitment to the brand lies with both the franchisor and the franchisee. Franchising can be seen as a dual edged sword where a franchisee can choose to re-brand and move to another hotel group, or the franchisor can ask the franchisee to discontinue using their brand if the quality requirements are not met. Managing franchises and the image of a brand results in companies spending a great amount of resources to assure that a consistently high quality of service is delivered across all branches and/or franchises (Your Business, 2011).
Not many studies investigating aspects around brand loyalty in the hotel industry could be found for the past ten years. Some notable international studies performed by Suhartanto (2011), Kayaman and Arasli (2007), Back (2005), Wilkins et al. (2010), Nam
et al. (2011), Lee and Back (2009), Han and Back (2008) and Kim et al. (2008) will be
discussed.
Suhartanto (2011:1) measured the perceived service differences based on the origin of the hotel brand (domestic or international). The study aimed to investigate the difference in loyalty determined by the origin of the hotel brand and was based on four
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determinants; service quality, customer satisfaction, perceived value and brand image. Guests in a four star Indonesian hotel participated and interestingly the study found that international hotel guests perceived to have experienced better service than domestic guests. International guests were also found to be more loyal to a particular brand determined by the origin. On the other hand, the study showed that perceived value and brand image is not influenced by the origin of the brand.
Kayaman and Arasli (2007:92) explored the interrelations perceived quality has on brand awareness, brand loyalty and brand image in the hotel industry in order to conceptualise customer-based hotel brand equity. Perceived quality was deconstructed into five elements namely tangibility, reliability, responsiveness, assurance and empathy and the relationships with each compared to brand equity variables. International guests from 11 countries staying at hotels in North Cyprus participated, the highest conglomerates were from Turkey and the USA followed by Cypriot nationals. The results showed that the tangibility of a good has a significant impact on both brand loyalty and image. Reliability and empathy have an impact on brand image, while responsiveness has an impact on brand loyalty. Brand loyalty, in turn, also had a significant impact on the brand image. Kayaman and Arasli (2007:105) therefore concluded that the three service qualities of tangibility, reliability and empathy are important ingredients for brand image marketing strategies.
Back (2005:462) explored the effects guests‘ image congruence has on post purchase behaviour in the hotel industry. Image congruence is the similarity the brand image has to the self image of the customer. The degree of image congruence amongst hotel guests in the USA was empirically tested to determine the effects it has on customer satisfaction and hotel brand loyalty. The outcome shows that social and ideal social image congruence significantly affects customer satisfaction which extends to an indirect effect on brand loyalty.
Another study also by Back and a colleague, Han (2008:467) investigated the possible influence social image congruence, ideal social image congruence as well as positive and negative consumption emotions have on customer loyalty towards lodging brands in the USA. The results show that both social and ideal social image congruence as well as positive and negative consumption emotions significantly influence loyalty.
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Wilkins et al. (2010:1) investigated in a qualitative study, the linkages between service quality, perceived value, customer satisfaction and behaviour loyalty and the possible link to the effect on brand trust and attitude. The outcome of the study, conducted in Australia, indicated that customer satisfaction supported by service quality holds the greatest direct impact on behavioural loyalty. The researchers also found that brand trust supported by brand attitude is a significant mediator of behavioural loyalty.
Kim et al. (2008:235), investigated the impact brand equity has on perceived value and revisit intention. Kim et al. (2008:235) divided brand equity into dimensions of brand loyalty, perceived quality, brand awareness and brand association. Respondent hotel patrons situated in the USA indicated that all dimensions of brand equity positively affect perceived value, with perceived quality identified a the main contributor. The dimensions of perceived quality, brand loyalty and awareness were found to increase guests‘ revisit intentions, showing the value a loyal customer will have on a hotel company‘s income.
Nam et al. (2011:1009) investigated the moderating effect customer satisfaction has on the relationship between brand equity and loyalty. Nam et al. (2011:1009) divided brand equity dimensions into physical quality, staff behaviour, ideal self congruence, brand identification and lifestyle-congruence. Effects were tested on consumer satisfaction amongst hotel guests and restaurant patrons in the UK. A notable difference between the Nam et al. (2011:1012) and Kim et al. (2008:235) studies is that Nam et al. (2011:1012) separated brand loyalty from brand. The results show that the equity dimensions of ideal self-congruence, brand identification and lifestyle-congruence have a positive effect on brand loyalty. The study also finds that consumer satisfaction partially moderates the effects of brand equity and loyalty.
Lee and Back (2009:30) investigated the mechanism of how brand satisfaction and an updated expectation of brand value can influence brand trust, which in turn, plays a role in attitudinal brand loyalty amongst convention delegates in the USA. The study concluded that brand satisfaction, mediated by an updated expectation of brand value has a positive influence on brand trust. Brand trust has a significant effect on attitudinal brand loyalty. The study further extended the model by dividing into high and low behavioural brand loyalty groups. The brand satisfaction to brand trust (mediated
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updated expectation of brand value) to attitudinal brand loyalty route were different for the two groups. The high behavioural group hold, not surprisingly, higher value to the indirect path of brand satisfaction to brand trust via updated expectation of brand value relationships. The surprise is, however, that the low behavioural brand loyalty group hold more significant value to the direct brand trust to brand value relationship.
In summary, studies have been done on influences playing a role toward brand loyalty in the hospitality industry in countries and states such as Indonesia, Australia, USA, UK, Canada, Turkey, and Cyprus. Most of the studies only test between three and five influences that play a role in brand loyalty. Table 2.1 gives a summary of the loyalty influences measured in the hospitality industry.
Table 2.1: Loyalty influences challenged in the hospitality industry
Loyalty influences measured
Researchers
service quality Suhartanto (2011:1); Wilkins et al. (2010:1) customer satisfaction Suhartanto (2011:1); Back (2005:462);
Wilkins et al. (2010:1); Nam et al. (2011:1009) perceived value Suhartanto (2011:1); Wilkins et al. (2010:1)
brand image Suhartanto (2011:1); Kayaman and Arasli (2007:92)
consumption emotions Han and Back (2008:467)
image congruence (incl. social and ideal)
Back (2005:462); Han and Back (2008:467)
brand trust Wilkins et al. (2010:1); Lee and Back (2009:30)
brand attitude Wilkins et al. (2010:1)
brand value Lee and Back (2009:30)
brand awareness Kayaman and Arasli (2007:92); Kim et al. (2008:235) perceived quality Kayaman and Arasli (2007:92); Kim et al. (2008:235)
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2.6 The Moolla and Bisschoff model
Moolla and Bisschoff (2012a:71) developed a model to measure brand loyalty. After a through literature search the authors found 28 of the most commonly occuring influences in brand loyalty. Through a process of elimination Moolla and Bisschoff (2012a:75) identified the twelve major influences of loyalty as: customer satisfaction, culture, brand performance, brand relevance, relationship proneness, brand affect, repeat purchase, perceived value, commitment, involvement, switching cost and brand trust. Moolla and Bisschoff (2012a:81) continued to developed a questionnaire to determine brand loyalty using these twelve influences and derived a few questions/ statements testing each influence either from literature or by self generation.
2.6.1 Brand loyalty influences of the Moolla and Bisschoff model
The definition, short discussion and operationalisation approach of each influence in brand loyalty chosen by Moolla and Bisschoff (2012a:80) are discussed in the points to follow.
2.6.1.1 Customer satisfaction
Kotler and Armstrong (2012:37) define customer satisfaction as ―The extent to which a good‘s perceived performance matches a buyer‘s expectations‖. If the good does not meet the expectations of the buyer, the consumer becomes dissatisfied. If expectations are met, the result is a satisfied customer. Customer satisfaction is believed to be the result of both conscious and subconscious consumer learning from previous experience and information gained (Huang & Yu, 1999:523). A more satisfied customer will result in higher levels of brand loyalty which has a significant influence on repurchase intent. Dissatisfied customers on the other hand will result in a higher tendency towards post purchase complaints. Customer satisfaction is a multifaceted influence and measurement includes the evaluation of all customer relationship aspects (Moolla and Bisschoff, 2012a:80).
2.6.1.2 Switching costs
Switching costs can be defined as the costs incurred when switching brands (Moolla & Bisschoff, 2012a:80; Lee & Cunningham, 2001:127). The three most prevalent types of switching costs are transactional costs, learning costs and costs due to a contractual outcome. High switching costs have a positive effect on profits as it will discourage
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even dissatisfied customers to change brand and is therefore used as a strategy to discourage customers to change brands (Dick & Basu, 1995:104; O‘Brien, 2010). Switching cost is one of the more easily measurable influences of brand loyalty which can be calculated by adding the cost of deserting the current brand to the cost of developing a new relationship with a different good (Moolla & Bisschoff, 2012a:80).
2.6.1.3 Brand trust
Various definitions for trust exist, but the focus of most definitions fall on the risk an individual takes regarding a situation and the vulnerability the individual then experiences due to the risk (Burke et al., 2007:606). Trust affects commitment and can therefore be seen as the foundation of loyalty as supported by Garbarino and Johnson (1999:70). Delgado-Ballester and Munuera-Alemán (2001:1254) describe brand trust as a feeling of surety that the brand will meet consumption expectations. Moolla and Bisschoff (2012a:80) extend by stating that brand trust is ―based on perceptions that the brand is reliable and responsible for the interests and welfare of the consumer‖. Trust in a brand is an emotional attraction to a good and forms the basis of a long-term loyalty relationship. Brand trust is therefore measured by determining the perceived credibility and confidence of a customer towards a particular brand.
2.6.1.4 Relationship proneness
Customer relationship proneness is the degree to which a customer will engage in a relationship with a company selling a particular good. Relationship proneness depends highly on the customer‘s individual personality traits. Relationship proneness is a cognitive decision from the customer to engage in a relationship as opposed to engaging in a relationship because of inertia or convenience (Moolla & Bisschoff, 2012a:77). Brand relationship proneness can be defined as the outcome of how a customer perceives their relationship with a retailer over time (Parish & Holloway, 2010:61).
Relationship proneness can be measured as the benefits a customer experiences from all aspects of a relationship with a retailer. Parish and Holloway (2010:61) specifically determined that customer relationship proneness depends on the trust and commitment a client has towards a company.
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2.6.1.5 Involvement
Involvement in the brand loyalty context can describe several types such as; ego involvement, purchase involvement or good involvement (Quester & Lim, 2003:24). Purchase involvement is connected to the buying activities of a customer. For the purpose of this study, the original definition of good involvement by Gordon et al. (1998:44) will be adopted, namely, that involvement with a good is the continuous commitment towards a good through thoughts, feelings and behaviour from the customer. Involvement can be seen as the arousal or interest which results in motivation towards a good. Higher involvement with a good leads to higher loyalty (Moolla & Bisschoff, 2012a:80).
2.6.1.6 Perceived value
Perceived value or value perception is the value or worth of a brand in the mind of the consumer and depends on the ability of the goods or service to satisfy expectations on all aspects (Investopedia, 2014). Customers do not have information on the true production cost of a good. The value of a good does not refer to the cost, but to the emotional worth and significance to a customer (Punniyamoorthy & Raj, 2007:233). Investopedia (2014) however, states that perceived value will affect the price a customer is willing to pay for a good. In other words, the value of a good to a customer is comprised of a functional value, emotional value and social value tied together by a price-worthiness influence. Functional value refers to the use or performance of a good, emotional value refers to the feelings a good generates, social value to the good‘s ability to enhance social self-concept and the price-worthiness influence refer to the concept of perceived value for money (Moolla, 2010:131).
2.6.1.7 Commitment
Anderson and Weitz (1992:19) described commitment as the ―state of developing stable relationships with partners, accepting short-term sacrifices in order to maintain relationships and assuring the stability of the relationships‖. Geyskens et al. (1996:305) elaborated on that statement by saying that commitment is the confidence a customer holds that the benefits from maintaining the relationship outweighs benefits from ending the relationship. Commitment represents the feelings of the customer towards a long term relationship with the brand and the choice to continue as a frequent buyer. A committed customer will gladly attach him or herself to the brand and promise to buy the
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brand regardless of circumstances. Committed customers will also defend the good from any negative opinions or rumours and will moreover encourage their friends, family and colleagues to buy it (Amine, 1998:313). The commitment a customer has towards a brand can therefore be defined as the degree to which a customer is committed to re-purchase in the future (Raju et al., 2008:855). The relationship a customer has with the good or brand plays a central role in the level of commitment. Commitment can be used as an indication of the degree to which the brand is protected from competitors. Evidence shows that the lasting desire a customer has to maintain a relationship with a brand can be used as a measuring tool to determine commitment (Moolla & Bisschoff, 2012a:78).
2.6.1.8 Repeat purchase
Repeat purchase forms the base of brand loyalty and simply refers to the extent to which a customer will repeatedly buy a good over a given time period (Ehrenberg, 1988:450; Dick & Basu, 1994:100). Repeat purchase also refers to the habit of frequent encounters with the good and is a direct function of repetitive buying as part of consumer behaviour (Moolla & Bisschoff, 2012a:133). Chaudhuri and Holbrook (2002:43) argued that once behavioural brand loyalty is strongly manifested, it is difficult to change the behaviour and will lead to repeated purchasing while re-enforcing loyalty towards the brand at the same time.
2.6.1.9 Brand affect
Brand affect can be defined as the potential of the good or service to obtain a positive emotion from the average consumer (Chaudhuri & Holbrook, 2002:37; Chaudhuri & Holbrook, 2001:82). Customers will, as part of human nature, naturally seek positive and avoid negative experiences. Positive experiences will result in a tendency to re-procure a particular good and will, over time, if the positive experiences are repeated, produce a loyal customer (Moolla & Bisschoff, 2012a:78). Brand affect can therefore be described as the emotional reaction a customer has towards a brand and is the result of having positive encounters with the brand (Kabadayi & Koçak, 2012:81). In other words, as long as the brand provides positive experiences to a customer, loyalty will remain. To measure brand affect, perceived positive emotions towards a brand as a result of usage, must be determined (Moolla & Bisschoff, 2012a:80).
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2.6.1.10 Brand relevance
Brand relevance is defined as ―the alignment of a brand‘s strategy and identity to provide a clearly stated benefit that address a need, want or desire of a given consumer or consumer segment‖ (Ashworth, 2007:520). Aaker (2012:44) simply describes brand relevance as a ―must have‖ brand. In a global market flushed with brands, consumers have the desire to build a relationship with a brand with which they can associate themselves. Consumers are increasingly looking for brands with relevance to their internal reference standards and brands that actually represent something or someone that can add value to their daily lives (Moolla & Bisschoff, 2012a:79). Branding efforts are therefore becoming more complex and marketing campaigns must convey vast amounts of information in order to empower the consumer to formulate an opinion around a brand‘s relevance (Aaker, 2011:18). The perceived relevance of a brand quantified against the internal reference standard of a customer must therefore be determined in order to measure brand relevance.
2.6.1.11 Brand performance
Perceived brand performance is the evaluation of the effectiveness of a good or service by a customer (Musa, 2005:47). Brand performance is a very tangible and easily measurable concept. The good or service is however not the only measurement of brand performance, but the direct seller performance i.e. the service and experience the sales person offers must also be taken into account. It is thus important to measure brand performance effectively, the performance of the good or service must be evaluated only after the entire experience (Moolla & Bisschoff, 2012a:79). Harris and de Chernatony (2001:445) feel that reputation plays an important role in brand performance.
2.6.1.12 Culture
Ana (2014) defines culture as ―A historically transmitted pattern of meanings embodied in symbols, a system of inherited conceptions expressed in symbolic forms by means of which humans communicate, perpetuate, and develop their knowledge about and attitudes towards life.‖ Culture can therefore also be defined as an integrated pattern of behaviour and belief that is a result of the human capacity to learn and transmit knowledge (Schroeder et al., 2006:191). When deciding upon whether to purchase a brand, customers measure the ethics of the brand against their own inherited morals
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and values and after they find a close match to their culture, are likely to join the culture of the brand. Consumer purchase behaviour is transmitted from one generation to the next as part of a culture system. Culture therefore plays a significant role in brand loyalty and plays an important role in buying behaviour. Family as an aspect of culture also plays an important role and adds a psychological aspect by indirectly inferring trust and safety through nostalgia and continuous use. The role family preference plays towards brand loyalty is confirmed by children remaining loyal to brands used by the family until other influences start to play a role (Moolla & Bisschoff, 2012a:79).
2.6.2 Ranking of the influences of brand loyalty
Moolla and Bisschoff (2013) ranked the loyalty influences of their model in order of importance, giving management a tool to strategically direct their marketing efforts when branding FMCGs. Moolla and Bisschoff (2013:6) generated standard regression weights in the following order:
1. Commitment (0.809) 2. Brand effect (0.793) 3. Brand relevance (0.770) 4. Perceived value (0.769) 5. Relationship proneness (0.701) 6. Repeat purchase (0.683) 7. Involvement (0.675) 8. Switching cost (0.597) 9. Culture (0.587) 10. Brand trust (0.461) 11. Brand performance (0.455) 12. Customer satisfaction (0.337)
The first five influences, commitment, brand effect, brand relevance, perceived value and relationship proneness have coefficients higher than 0.7 and will have a major effect on brand loyalty and can therefore be used as a strong marketing tool. Repeat purchase, involvement, switching cost and culture have smaller coefficients of between 0.7 and 0.5, having less influence as a marketing tool. Due to their relatively low coefficients, brand trust, brand performance and customer satisfaction are not highly recommended as marketing tools in the FMCG industry.
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2.6.3 Validation of the Moolla and Bisschoff model
Moolla and Bisschoff (2012b:101) tested the proposed model and determined the validity and reliability of both the statements and the model using data from customers in the FMCG industry. FMCG are defined as goods replaced or fully consumed within a short (days, weeks) period of time mostly because either a short shelf life (e.g. perishables) or a fast turnover time due to demand. Moolla and Bisschoff (2012b:101) chose to assess their model using three FMCGs, being coffee, toothpaste and bread These products were chosen based on the high consumption rate within their FMCG categories while the products differ in consumption patterns (Moolla & Bisschoff, 2012c:346). The model was evaluated using a questionnaire developed by themselves during a separate study (Moolla & Bisschoff, 2012b:107) to which 541 post-graduate management students in full time employment thoughout South Africa respondent.
The Statistical Package for the Social Sciences Incorporated (SPSSInc) was used to analyse data. Moolla and Bisschoff (2012b:105) only accepted exploratory factor loadings of smaller than 0.400 to validate the influences of brand loyalty. The Kaiser-Meyer-Olkin (KMO) measure of sampling adequacy was used to determine if the sample size was large enough to give statistically meaningful results. KMO values of between 0.50 and 0.700 were regarded as mediocre while values above 0.700 were considered good enough to accept. Bartlett‘s test of spherity was used to determine if the variables are uncorrelated in the population. A correlation value of below r = 0.005 indicated that the data are suitable for exploratory factor analysis. Variance was used to determine the importance each influence has on brand loyalty. Cronbach‘s alpha was used to test the reliability of each of the brand loyalty influences within the model. Moolla and Bisschoff (2012b:106) accepted a Cronbach‘s alpha of 0.580.
The results of the study showed that all the questions / statements testing for customer satisfaction, brand trust, relationship proneness, involvement, perceived value, repeat purchase, commitment, brand affect, brand relevance, brand performance and culture are influences of brand loyalty with variances between 47% and 72% and reliability coefficients of between 0.702 and 0.822. One statement of switching cost however resulted in a low factor loading of 0.204 and was removed from the questionnaire. All the influences except perceived value and repeat purchase loaded single exploratory factors with acceptable variance and reliability ranging from mediocre upward. It was
